Newsletter: A Mini-Deal and Big Uncertainty

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Happy Columbus Day. On Wall Street, the bond market is closed, stock markets are open, and we have a full slate of economic news to start the week.

Baby Steps

Small steps toward a trade truce between China and the U.S. last week likely aren’t enough to diminish uncertainties that are holding back global economic growth, Jon Hilsenrath and Josh Zumbrun report.

Negotiators agreed to put off a round of U.S. tariff increases set for this week but left undecided what will come of tariffs scheduled for December or the levies already in place on about $360 billion of Chinese goods.

Details on an agreement for China to purchase as much as $50 billion in U.S. agricultural goods were elusive, while disagreements on matters including intellectual-property enforcement and Chinese subsidies to state firms, were unresolved.

New fronts in a global trade war are opening, including a U.S. plan to hit European aircraft, whiskey, cheese and hand tools with tariffs and a potential decision in November on European cars.

Economists have for decades theorized that businesses react to uncertainty by pulling back on investment and employment, and a slew of economic data in recent months strongly suggest the theory has become reality.

China’s exports to the U.S. shrank by more than one-fifth last month as heavier tariffs hit. Chinese shipments to the U.S. slumped nearly 22% in September from a year earlier, accelerating from a 16% decline in August. Worldwide, exports fell 3.2%.

China’s exporters don’t appear poised for a quick rebound. As part of a mini deal, the Trump administration left in place tariffs on nearly $360 billion worth of Chinese imports.

Oxford Economics’s Gregory Daco says trade measures enacted so far are knocking a half-percentage point off of U.S. economic growth: “This mini-deal doesn’t make the outlook rosier–simply less bad.”

Land of Opportunity

For years, American companies looked to China as a land of new opportunity. Now a new reality is settling in: The Chinese consumer isn’t about to save the day for Western brands, Julie Wernau reports.

American firms now face two major challenges. One is that local Chinese brands are getting stronger. The other is that Chinese consumers are increasingly turning away from foreign brands because they have run afoul of Chinese politics.

The shift signals a possible end of an era. For years, it was customary for Western executives to tout their plans for dominating China. But foreign consumer brands now hold a smaller market share than at any time since the global financial crisis.

Toil, Tears and Sweat

It’s a critical week for Brexit. European Union and British negotiators spent the weekend trying to find an agreement that would seal Britain’s divorce from the bloc before an Oct. 31 deadline. But Sunday evening diplomats said there had been no breakthrough. The talks will continue ahead of a summit Thursday between British Prime Minister Boris Johnson and European Union officials. If no deal is reached by Oct. 19, then a law passed by the British Parliament forces the government to request an extension to the negotiations. In that case, Thursday’s summit discussions would likely focus on conditions, if any, under which the bloc would grant an extension to delay Brexit, Laurence Norman and Max Colchester report.

UAW Strike Will Show Up In October Jobs Report

The United Auto Workers is increasing its weekly payout to General Motors workers on strike, a sign the union is preparing to extend a nearly monthlong walkout that has halted work at the company’s U.S. factories. The UAW said Saturday more than 46,000 hourly workers on the picket line will see weekly strike pay increase to $275 from $250 starting Sunday, Nora Naughton reports.

That’s gonna leave a mark. The strike started too late to affect the September jobs report. For October, those 46,000 workers won’t be counted as employed. Berenberg Capital’s Roiana Reid says there will also be secondary effects through the supply chain, potentially boosting that number above 60,000: “Taken together, the strike could temporarily push nonfarm payroll growth below 100,000 to around 80,000 in October.”

On the Road Again

Women are flocking to trucking. The number of female truckers in the U.S. increased by 68% since 2010 to 234,234 in 2018, according to the American Trucking Associations. One big reason: equal pay. “There are many different types of driver pay in the industry, including by the mile, per load, hourly, and even salary in some cases,” says ATA economist Bob Costello. “In all cases, there is no distinction between male or female.” Even with the big jump, women still account for just 6.6% of the trucking workforce, Cristina Roca and Dieter Holger report.

TWEET OF THE DAY

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